Friday, October 29, 2010

Deal with union saves JLR plant

S Kalyana Ramanathan / London October 16, 2010

Tata to invest £1 bn a year, workers agree to wage settlement

After completing an investment of about £1 billion over the last one year in new technologies and product development, Tata Motors-owned Jaguar Land Rover (JLR) today said that it would continue to invest an equal amount every year over the next five years.

Improving sales and a return to profitability have also enabled the company to reconsider its plans to close one of its plants in UK’s Midlands. JLR has signed a new deal with its unions that will see pay rise for existing workers by around 5 per cent and also add another 1,500 workers over the next year, taking its total workforce to 17,500 by the end of next year.

“This is a triumph for all concerned,” said JLR Chief Executive Ralf Speth. “The agreement is a great deal for our workers and the company, and we can now really get on with working together to achieve an even more exciting future for the Jaguar and Land Rover brands. This is truly the beginning of a new era for Jaguar Land Rover.”

Nearly a year ago, the company had announced plans to shut one of its plants in the UK and streamline operations without any additional job losses.

RECOVERY ROAD

# 3 plants, 2 development sites in UK kept until 2010

# Two-year agreement with the workforce on wages

# Annual investment of £1 bn a year for next 5 years

# 4,000 new jobs to be created over the next decade

The present intention to keep all three plants in the UK comes as a surprise. A couple of weeks ago, Tata Motors CEO Carl-Peter Forster had said at the Paris Motor Show that JLR wanted to merge plants. “The most efficient model is one large operation,” he had said.

Dave Osborne, union Unite’s lead negotiator for the car industry, said: “This agreement secures the future of all JLR workers in the UK for the next 10 years and beyond. Just 18 months ago, our members agreed to changes to their terms and conditions, which ultimately helped the company navigate its way through an unprecedented recession. There can be no bigger sign of loyalty to JLR than that.”

Commenting on the new deal, David Bailey of Coventry University Business School and an expert on UK's automotive sector, said: "JLR gets to cut costs, a plant stays open and new workers will get new jobs in the future, albeit on lower starting rates of pay. The latter is especially important as, with an ageing population and workforce, people leaving the firm will be replaced by younger, cheaper workers, giving the firm a competitive boost. But the overwhelmingly good news is that the threat of closure has been lifted from the historic Castle Bromwich plant here in Birmingham."

A JLR spokesperson said that development of a new sports car by Jaguar will continue as proposed earlier, and will be positioned a notch below the current Jaguar XK model. The concept electric hybrid, also under the Jaguar badge, will not be rolled into commercial production anytime soon. "That was a model developed to celebrate Jaguar 75th anniversary, not for production," the spokesperson clarified.

Tata Motors group sales were up by 19 per cent in September. JLR global sales in September were 19,528 vehicles, higher by 16 per cent. Jaguar sales for the month were 4,861, higher by 10 per cent, while Land Rover sales were 14,667, higher by 19 per cent.

Cumulative sales of JLR for the fiscal are 112,287, higher by 40 per cent. Cumulative sales of Jaguar are 29,780, higher by 27 per cent, while cumulative sales of Land Rover are 82,507, higher by 45 per cent.